Ortiz-Valles v. McDonald — VA must consider marginal employment even for unemployed veterans when TDIU is reasonably raised

Ortiz-Valles v. McDonald addressed whether VA may consider “marginal employment” under 38 C.F.R. § 4.16(a) only when a veteran is already employed. The veteran sought entitlement to TDIU based on multiple service-connected disabilities, including lumbar spine impairment and vertigo. VA examiners concluded that he could perform only restricted sedentary or part-time work with significant physical limitations. One examiner specifically stated that the veteran could work “at least in a part-time fashion,” while another suggested only semi-sedentary or light-duty positions such as receptionist or clerk work.

The Board denied TDIU, concluding that the veteran was not precluded from substantially gainful employment due solely to his service-connected disabilities. However, the Board failed to analyze whether the limited occupational capacity described by the VA examiners amounted to only marginal employment rather than substantially gainful employment.

On appeal, the Secretary argued that marginal employment analysis applies only when a veteran is actually employed because the regulation discusses earned annual income. The Court rejected that interpretation. Reading § 4.16(a) as a whole, the Court held that the regulation focuses on a veteran’s capability to secure or follow substantially gainful employment, not the veteran’s current employment status. The Court explained that marginal employment is expressly defined as not substantially gainful employment, and therefore VA must consider whether a veteran is capable of more than marginal employment whenever the issue is reasonably raised by the record.

The Court further held that the Board’s reasons or bases were inadequate because it relied on evidence showing only highly restricted or part-time work capability without discussing whether such employment would actually qualify as substantially gainful employment. The matter was vacated and remanded for the Board to determine whether the veteran was capable of more than marginal employment and to adequately explain its conclusions.

Under 38 C.F.R. § 4.16(a), marginal employment is not substantially gainful employment. The Board must address whether a veteran is capable of more than marginal employment whenever the evidence reasonably raises that issue, even if the veteran is unemployed.

Part-time sedentary work restrictions, limited occupational capacity, or evidence suggesting only highly restricted employment may reasonably raise the issue of marginal employment. The Board cannot deny TDIU without explaining whether the veteran is capable of substantially gainful employment rather than merely marginal work.

Ortiz-Valles is one of the most important TDIU clarification cases because it shifts the focus from actual employment status to occupational capability. VA frequently denies TDIU after examiners state that a veteran “can do sedentary work” or “can work part-time.” This case requires VA to go further and analyze whether that work would actually qualify as substantially gainful employment under § 4.16(a).

VA often relies on vague statements that a veteran can perform “sedentary,” “light duty,” or “part-time” work without analyzing whether such work constitutes substantially gainful employment rather than marginal employment.

A veteran with severe orthopedic limitations receives a VA opinion stating he can perform sedentary desk work with frequent breaks and limited hours. The Board denies TDIU based on that opinion alone. Under Ortiz-Valles, the Board must also analyze whether the veteran is realistically capable of more than marginal employment.

This case is highly useful when:

• VA relies on “sedentary work” opinions
• examiners describe only part-time or heavily restricted work capacity
• the Board fails to discuss whether employment would be marginal
• the evidence suggests protected, sheltered, or highly accommodated employment
• VA equates theoretical employability with substantially gainful employability

Ortiz-Valles is especially powerful when paired with vocational evidence addressing productivity limitations, attendance issues, accommodation requirements, or inability to sustain competitive employment.

38 C.F.R. § 4.16(a), Robinson v. Peake, Faust v. West, Ferraro v. Derwinski, Moore v. Derwinski